Do I need to pay tax on my savings?// Tax on savings explained. When do you need to pay income tax on your savings? How do you pay tax? Find out in this short video.

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It may come as a bit of a surprise that you may need to pay income tax on your saving account interest, and the amount you will need to pay depends on three things:
1. Your personal allowance
2. Your starting rate for savings
3. Your personal savings allowance

This is, of course, if you don’t have an ISA (individual savings account), which would allow you to save tax-free!

The personal allowance is currently set at £12,500, the starting rate for savings is set at £5,000 and the personal savings allowance at £1,000 if you’re in the basic tax band and £500 if you’re in the higher tax bracket. All figures are based on the 2020/21 tax year.

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